TradeIX and R3 Launches Pilot of Blockchain Trade Finance Platform

Blockchain software startup R3, trade finance tech provider TradeIX and a group of major banks have successfully carried out their first proof of concept for Marco Polo, their blockchain trade finance project, and are now ready to start the project’s pilots.

The news follows on from what the firms call in a press release a “successful” proof-of-concept that started last September in partnership with BNP, Commerzbank and ING. The project is eventually hoped to on-board in total 20 to 25 banks by the end of 2018, including third-party service providers, such as credit insurers and enterprise resource planning and logistics providers.

Marco Polo is an open account trade finance platform based on blockchain technology, which aims to enable real-time connectivity between trade participants, improve visibility into trade flows and simplify access to credit and risk mitigation services throughout the trade lifecycle.

Since its launch in September, other banks have joined in, including Bangkok Bank, Barclays, BBVA, Bladex, CTBC Bank, Intesa Sanpaolo, Shinhan Bank, Royal Bank of Scotland and Wells Fargo. Standard Chartered, DNB and OP Financial Group have got involved with the project more recently.

“The fact that more banks have joined illustrates the interest in this project and in the potential of distributed ledger technology in supply chain finance solutions,” says Jacques Levet, head of transaction banking, Emea at BNP Paribas.

Nikolaus Giesbert, Divisional Board Member, Fixed Income, Currencies & Commodities and Trade Finance & Cash Management, Commerzbank AG said: “We are one of the first three banks to successfully perform the proof-of-concept acceptance tests which is a major achievement for us.

“We are pleased with how far the development has come in such a short timespan. Together we have proved, that blockchain technology will make trade finance faster and more transparent for all participants.”

The companies strive to develop a “fully interoperable” open-source trade finance network created with R3’s distributed ledger platform Corda which will be delivered over TradeIX’s open TIX platform.

“The tests ING ran as part of the proof-of-concept enabled us to see the value this solution could deliver in three separate areas of trade financing. The technology ran fast and smoothly and the positive results showed us we are on the right track and ready to take the next step by entering into a pilot,” said Ivar Wiersma, head of innovation at ING Wholesale Banking.

R3 is already working with Microsoft, having already moved to more deeply integrate its Corda with Azure cloud service in late 2017.

Microsoft‘s senior director and financial services business lead, Asia, Connie Leung thinks that the traditional way of processing paper is a “significant burden” to businesses, adding that „the industry has been looking for solutions to simplify and digitize trade, making supply chain ripe for the benefits of blockchain technology,” she said.

Marco Polo is one out of two trade finance projects that R3 is currently engaged with. The other, Voltron, was the first trade finance prototype to be presented by R3 last year. Built in partnership with CGI and a group of 11 global banks, the purpose of the project is to streamline the processing of sight letters of credit, and the parties are in the process of piloting the platform with the aim of making it widely available this year.

Sophie Wiberg Holm, project lead at R3, said the two applications “complement each other nicely”, and that the main plan is “to see how these different trade finance initiatives can merge into a larger ecosystem of trade products”.

It is obvious that trade finance continues to attract banks and other financial service providers, even though trade finance is very difficult to operate and expensive for all participants. Marco Polo is just one of the many finance initiatives that are already under way.